Gaza officials said that at least 318 Palestinians, including 70 children, have been killed in the 12-day conflict

* Buffer zone set up in tunnel-riddled frontier

* Palestinians say 325 killed since July 8

* U.N.'s Ban to visit the region in peace bid

* Palestinian president set to visit Qatar (Adds details)

By Nidal al-Mughrabi and Dan Williams

GAZA/JERUSALEM, July 19 (Reuters) - Israeli tanks and bulldozers dug in across a mile-wide strip of Gaza's eastern frontier on Saturday, and Palestinian officials said military strikes had killed more than 300 people, most of them civilians.

Israeli sent in ground forces on Thursday after 10 days of air and naval barrages failed to stop rocket fire from Gaza.

The military said its engineers were concentrating on a buffer zone 2.5 km (1.5 mile) wide and were looking to destroy concealed rocket launch pads and tunnels dug by Gaza's dominant Hamas Islamists after the last big flare-up of violence in 2012.

Hamas said its fighters used one such tunnel to slip into Israel on Saturday, inflicting casualties. The Israeli military confirmed the incident near central Gaza, saying it killed one militant, repelled the rest, and four soldiers were wounded.

Palestinians also launched at least 18 rockets into Israel on Saturday, killing a man and wounding four people, including two children, in a southern Bedouin Arab village, police said.

Gaza officials said that at least 325 Palestinians, including 70 children, have been killed in the 12-day conflict.

On Israel's side, a soldier and two civilians have died.

"I live in fear expecting death. I no longer know what's more difficult - to die or to await death," said Ali Mahmoud, a 40-year-old resident of the northern Gaza town of Beit Hanoun from where from the Israeli ground action could be heard just 800 metres (yards) away.

Hostilities had escalated following the killing last month of three Jewish seminary students that Israel blames on Hamas. Hamas neither confirmed nor denied involvement. The apparent revenge murder of a Palestinian youth in Jerusalem, for which Israel has charged three Jews, further fuelled tensions.

Military spokesman Lieutenant-Colonel Peter Lerner said 13 tunnels, at least one of them 30 metres (90 feet) deep, and 95 rocket launchers were found and destroyed in the Gaza sweep.

Searches were continuing what he described as an open-ended mission that had "severely impeded Hamas capabilities".

CASUALTIES

Gaza medical officials said the attacks from Israel on Saturday killed 33 people, mostly civilians, in Beit Hanoun, neighbouring Beit Lahiya and in Khan Younis in the south.

Khamis Shaath, a Khan Younis paramedic, rushed to attend to the casualties and discovered two of the dead were his nephews while his wife and son had been wounded, colleagues said. Collapsing in grief, he had to be taken to a hospital himself.

The military had no immediate word on the Beit Lahiya and Khan Younis incidents, though it confirmed attacking 37 sites on Saturday. Israel says it tries to avoid civilian casualties and that Hamas invites them by operating from within urban areas.

In Beit Lahiya, the military said, troops raided a house and killed a gunman after he wounded three soldiers. The Palestinian faction PRC said it ambushed the Israeli army unit. Islamic Jihad, another faction, said it was fighting alongside Hamas.

Israel says more than 1,500 rockets have been fired at its towns and cities during this month's fighting. The Israeli death toll has been kept low due to the rockets' relative inaccuracy, an extensive network of civilian air raid sirens and shelters and the Iron Dome rocket interceptor's 90 percent success rate.

The escalation of hostilities, and its toll on Gaza's 1.8 million Palestinians as well as on Israelis jarred by rockets that have reached Tel Aviv and beyond, have spurred so-far fruitless truce bids by Western powers and regional go-betweens.

NO CEASEFIRE

Egypt has no plans to revise its ceasefire proposal, which Hamas has rejected, Cairo's foreign minister said on Saturday.

U.N. Secretary-General Ban Ki-moon planned to travel to Israel and the Palestinian territories this weekend. Palestinian President Mahmoud Abbas is also looking to secure a ceasefire and was due to travel to regional power Qatar later in the day to see the emir of the Gulf state.

It was not clear whether he would also see Hamas's leader, Khaled Meshaal, who lives in exile in Qatar.

France has also mooted mediation by Qatar, which has helped fund Gaza projects in the past, but Israel is cool to the idea.

The Israelis prefer Egyptian intercession. Yet with Egypt having cracked down on its Muslim Brotherhood - Hamas's ideological kind - and viewing Hamas as a security threat, Cairo's clout with the Palestinian Islamists is in doubt.

"There will be no truce without an end to the war that the Occupation (Israel) began, a lifting of the blockade and a halt to all violations and killings in Gaza and the West Bank," Hamas spokesman Sami Abu Zuhri said in Gaza.

The United Nations said more than 50,000 Palestinians had taken refuge from Israeli attacks in its various Gaza buildings.

"One or two days of F-16 strikes on our neighborhood and we'd had enough," Ahmed Abdel-Ahad, 42, said at a U.N. school in northern Jabalya, where he was camped out with his family.

Palestinian officials said 90 percent of Gaza's electricity had been cut by Israel. The Israeli energy ministry had no immediate response. On Sunday, it said a Palestinian rocket had crippled a power line to Gaza from Israel and it would not endanger engineers by sending them to conduct repairs.

Hamas, Gaza's dominant Islamist group, refuses to hold fire unless embargoes by Israel and neighbouring Egypt are eased and other demands are met. The Israelis say they are ready to step up their Gaza assault, though they do not aim to topple Hamas. (Additional reporting by Noah Browning in Gaza; Editing by Louise Ireland)

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